T 

DOCUMENTS 
DEPT. 


UC-MRi  c 

ill! 


OF  THE 
UNIVERSITY 

OF       K 

caufort^ 


«u;-:S:f;';n::!'r 

■:'{::. 

STATEMENTS 
V^^  of 

-'^     MR.   WILLIAM  DEN)iIAN,   Chairman.., 

DOCUMENTS 
DEPARTMENT 

before  the 

UNITED  STATES  HOUSE 
COMMITTEE  ON  APPROPRIATIONS 


64th  CONGRESS 


United  States 

Government  Printing  Office 

Washington 


UNITED  STATES  SHIPPING  BOARD 


STATEMENTS 


OF 

MR.  WILLIAM  DENMAN,  CHAIRMAN,  AND  MR. 

THEODORE  BRENT,  COMMISSIONER  OF  THE  SHIPPING 

BOARD,  AND  CAPT.  CHARLES  YATES,  COAST 

AND  GEODETIC  SURVEY 


BEFORE  THE 


'^SUBCOMMITTEE  OF  HOUSE 
COMMITTEE  ON  APPROPRIATIONS 


^ 


IN  CHARGE  OF 


SUNDRY  CIVIL  APPROPRIATION  BILL  FOR  1918 


SIXTY-FOURTH  CONGRESS 

SECOND  SESSION 


WASHINGTON 

GOVERNMENT  PRINTING  OFFIC£ 

1917 


Documents  DeptJ* 


At 

OOCUMENTS 

OEPT. 


UNITED  STATES  SHIPPING  BOARD. 


Saturday,  Fkbruaky  10,  1917. 

UNITED  STATES  SHIPPING  BOARD. 

STATEMENTS  OF  MR.  WILLIAM  DENMAN,  CHAIRMAN,  AND  MR. 
THEODORE  BRENT,  COMMISSIONER  OF  THE  SHIPPING  BOARD, 
AND  CAPT.  CHARLES  YATES,  COAST  AND  GEODETIC  SURVEY. 

GEXEH.M,   I'l.AN    OK  OIUiA  MXA  TION  . 

The  Chairman.  You  have  submitted  an  estimate  of  $700,000. 
Will  you  please  explain,  now,  just  how  you  expect  to  ex]:)en(l  this 
money  ? 

Mr.  Denman.  Our  statement  will  be  very  full.  It  will  arouse  the 
opposition  of  our  powerful  foreign  competitors,  but  we  feel  that 
(\;neress  shou.ld  know  what  our  expenditures  are  aimed  to  help  in 
accomplishino;. 

This  board  has  to  perform  two  cla>ses  of  functions:  First,  it  has 
reofulatorv  duties  as  an  administrative  board  of  the  Government: 
and  second,  it  has  to  run  a  business.  That  business  may  be  of  either 
one  of  two  things :  It  may  be  either  the  chartering  of  vessels,  bought 
witli  this  $50,000,000  apjn-opriation,  to  other  people,  so  that  private 
owners  and  private  carriers  may  be  stimulated  to  conduct  the  over- 
seas business  of  the  country  without  the  fear  of  Go\ernment  com- 
petition, or  it  may  consist  of  the  formation  of  a  corporation  or  cor- 
porations in  which  the  $50,000,000  may  go  and  be  used  for  the  pur- 
chase of  the  chartering  of  vessels  to  be  operated  by  the  Government 
itself — the  general  running  (d"  a  transportation  business.  You  can 
see  the  two  classes  of  functions,  one  the  administrative  function,  such 
!is  the  prevention  of  discrimination,  the  examin;iti<  n  into  couiplaints 
of  various  evils  that  ari.se  in  the  shipping  trades,  the  reporting  on 
discriminations  by  foreign  Governments,  and  the  preparation  of 
reports  to  Congress  for  future  legislatjf)n.  That  is  one  class  of 
function.  Then  there  is  the  other,  the  operating  (sr  chartering  a 
l)usiness.  In  that,  I  think,  we  are  unlike  anj  other  (irovernmeiit 
board.  There  is  no  other  board  which  is  called  upon  by  Congress 
to  run  a  business  which  takes  its  jilace  in  the  world  of  commercial 
.activity. 

As  to  the  governuiental  function,  we  have  to  come  to  you  for  our 
appropriation.  As  to  -the  business  functions,  we  can  either  get  the 
money  from  Congress  or  we  can  form  these  corporations  and  spend 
the  $50,000,000  that  is  already  appropriated  to  us  through  the  bond 
issue.  Our  feeling  about  it  is  that  we  should  not.  if  we  can  avoid  it. 
enter  into  competition  through  a  corporation  with  existing  transpor- 
tation agencies,  and  that  we  should  do  everything  in  our  power  to 

8 


ivi04;j0(;5 


4  UNITED    STATES    SHIPPIXG    BOARD. 

assist  private  American  capital  to  continue  the  transportation  busi- 
ness and  new  capital  to  .2:0  into  it,  and  at  the  same  time  to  persuade 
the  American  boys  to  man  our  ships.  The  charters  ^Yhich  we  should 
make  when  we  ^et  the  vessels  should  be  charters  to  private  persons 
and  to  stimulate  private  interest  in  over-sea  carriage.  If  we  can  not 
do  that — as  we  can  not  unless  we  get  the  money  from  you  for  that 
purpose — we  shall  have  to  form  corporations  and  enter  into  the  ship- 
ping trade  ourselves. 

As  to  the  funds  for  administrative  purposes  of  the  Government 
side  of  the  activities  of  the  board  we  have  come  to  you.  in  any  event. 
It  will  be  a  matter  of  the  policy  of  Congress,  expressed  in  the  grant 
or  nongrant  of  funds,  whether  it  wishes  us  to  go  into  this  private 
corporation  and  enter  into  the  field  of  management  or  wish  us  to 
simply  have  supervision  over  the  ships  we  have,  distributing  them 
by  charter  to  the  private  owners,  to  be  used  in  over-seas  trade,  which 
will  stimulate  the  flow  of  our  products  in  various  directions.  Our 
hope  is  and  our  estimates  are  based  on  the  theory  that  you  desire 
us  to  give  the  experiment  of  private  ownership  and  operation  as  long 
a  trial  as  we  can  before  we  go  over  into  the  field  of  public  operation 
by  this  series  of  corporations  which  we  might  form,  and  consequently 
we  haA'e  asked  for  money  for  operating  expenses. 

In  order  that  we  may  not  increase  the  expenditures  in  our  pre- 
ferred plan  over  the  method  of  corporation  administration,  it  is  our 
intention  to  spend  not  over  $49,300,000  of  our  bond  money  unless  an 
active  military  necessity  compels  us. 

Mr.  GiixETT.  On  the  other  hand,  does  it  not  do  this  really  :  If  Con- 
gress appropriates  $700,000.  that  makes  the  general  appropriation, 
instead  of  $50,000,000,  $50.700.000 :  and  if  you  keep  on  in  that  way 
the  $50,000,000  Avill  still  be  in  your  hands  and  everything  that  goes  to 
you  now  will  be  so  much  extra  ? 

Mr.  Denman.  I  think  that  is  true.  That  is.  we  would  have  the 
$700,000  and  we  would  have  the  $50,000,000:  but  if  we  do  not  get  the 
money  to  administer  these  functions  as  contemplated,  you  compel  us 
to  form  the  corporations  and  force  us  over  into  the  field  of  operating 
the  corporations.  We  do  not  want  to  go  there  until  the  ])rivate  o]")er- 
ator  forces  us.  We  want  to  see  the  present  shipping  men  and  the 
sons  of  the  present  shipping  men  owners  of  the  business.  AVe  do  not 
want  to  disturb  them. 

Mr.  SiTERLEY.  Plow  far  are  you  now  able  to  segregate  your  esti- 
mate into  expenditures  for  your  board  purely  as  a  governmental 
agency  and  how  far  for  its  work  in  promotion  of  the  merchant 
marine  ? 

Mr.  Den  MAX.  We  have  attempted  to  make  a  segregation  of  the 
functions,  but  they  overlap  in  places.  For  example,  we  would  have 
to  have  agents  in  South  America  to  advise  us  on  our  charters,  and 
those  agents  would  be  sending  home  reports  of  other  South  American 
conditions,  and  those  reports  would  be  taken  over  and  considered  by 
our  division  of  investigation  and  legislation.  One  division  would 
work  into  the  other.  The  busiess  agents  would  gather  knowledge  for 
scientific  compilation. 

Mr.  Shehlev.  If  it  were  possible  to  make  a  division  of  the  sum 
total  you  ai-e  asking,  then  this  roinniittee  and  (^ongress  subv;e(iuontly 
could,  by  the  amount  ol"  the  appropriation,  deteimine  the  policy. 


UNITED   STATES   SHIPPING   BOARD.  5 

Mr.  Denman.  1  think  this,  as  engaging  in  business  througli  the 
corporation  or  mere  chartering,  shoukl  be  done  only  with  the  cer- 
tainty that  Congress  lias  in  mind  what  it  is  doing. 

As  ab()\e  indicated,  it  would  be  unfortunate  foi-  our  merchant 
marine  il'  it  did  so.  because  we  feel  very  definitely  that  if  we  are  going 
toaccom[)lish  what  has  to  be  accomplished  in  the  way  of  getting  more 
men  and  more  ships  from  private  entei'prise  cut  there  on  the  seas  we 
should  not  tie  the  hands  of  j)rivate  enterprise  by  the  fear — which 
alone  is  enough  to  make  them  hesitate — that  the  (i<)\ernment  is  going 
to  come  in,  and  by  the  power  which  the  (ilovernment  has  to  artificially 
direct  trade,  destroy  established  private  business. 

The  Chairman.  Your  present  estimate  is  based  upon  the  theory 
that  you  will  not,  unless  an  exceptional  situation  should  arise,  organ- 
ize a  corporation  during  the  next  fiscal  year!' 

Mr.  DioNivrAN.  Yes,  sir. 

The  CiiAiioiAX.  And  if  you  do  not  organize  the  corporation  then 
the  entire  $50,000,000,  as  the  proceeds  of  the  bonds,  would  be  available 
for  the  chartering  or  acquisition  of  ships? 

Mr.  Den  MAX.  Yes.  sir. 

The  Chairman.  I  understand  that  the  money  will  be  devoted  ex- 
clusively to  the  acquisition  of  ships  and  not  utilized  in  current  or 
operating  expenses!' 

Mr.  Denman.  Exactly.     By  chartering  and  not  operating. 

The  Chairman.  Through  going  concerns? 

Mr.  Denman.  Yes,  sir;  by  chartering  only. 

The  Chairman.  At  this  time  the  board  has  determined  upon  the 
policy  of  proceeding  upon  the  theory  that  if  it  can  be  carried  out  it 
will  be  more  desirable  and  beneficial  not  to  organize  the  corporation, 
but  to  have  the  power  of  merely  acquiring  and  chartering  ships  as 
they  have  operated  under  private  owners? 

Mr.  Denman.  That  is  the  attitude  of  the  board.  Operation  in 
trades  needing  stimulation  over  initial  difficulties.  If,  after  a  fair 
trial,  the  trade  will  not  support  itself,  the  ships  should  go  elsewhere. 
But  the  time  of  the  experiment  should  be  ample. 

i\Ir.  BiiENT.  The  estimate  is  made  on  the  assumption  that  Congress 
will  apjDropriate  the  money  to  carry  on  all  the  departments  provided 
for  by  all  the  various  sections  of  the  shipping  law. 

organization  of  board. 

The  Chairman.  With  that  understanding  would  you  now  state 
how  you  prepared  the  estimate  and  how  you  segregated  it,  wherever 
possible?     When  was  the  board  appointed? 

Mr.  Brent.  The  members  were  appointed  on  the  2'2d  of  December. 

The  Chairman.  Ajid  when  did  it  commence  its  business? 

Mr.  Brent.  The  appointees  commenced  their  w^ork  just  after 
Christmas. 

The  Chairman.  When  did  the  board  commence  to  go  to  Avork — 
immediately  upon  appointment  or  after  confirmation? 

Mr.  Brent.  No;  we  were  at  work  between  Christmas  and  New 
Years.    The  board  organized  formally  on  the  30th  of  January. 

Mr.  Denman.  That  was  after  confirmation. 


UNITED    STATES   SHIPPING    BOAED. 


Mr.  Brent.  In  the  meantime  the  work  on  these  estimates  were 
going  forward  and  the  outlines  of  our  organization  carefully  de- 
veloped. 

Mr.  GiLLETT.  Was  there  an}^  appropriation  for  the  board  last  year? 

Mr.  Brent.  $100,000.  to  continue  until  June  30. 


LAW     DIVISION. 


Mr.  Denman.  We  have  made  six  grand  divisions  of  the  functions  of 
the  board.  The  law  division  is  really  a  subdivision  of  employees. 
The  function  of  the  law  division  will  be  scattered  to  a  certain  extent 
throughout  the  different  divisions.  In  the  divisions  of  complaints — 
that  is,  the  division  of  regulation  of  transportation — of  course  the  ex- 
aminers and  experts  will  probably  perform  a  large  part  of  the  work, 
and  in  many  cases  they  Avill  not  be  lawyers.  The  first  administrative 
function  is  [pointing  to  the  chart  of  organization]  at  the  left  of  the 
second  line.  It  is  the  division  of  regulation  of  transportation  by 
water. 

A  part  of  the  functions  of  the  board  will  be  the  regulation  of  com- 
mon carriers  on  the  high  seas  and  on  the  Great  Lakes,  and  that  regu- 
latory duty  flows  from  our  requirement  to  hear  complaints  concerning 
violations  of  the  act,  discriminations,  refusal  to  accept  goods,  and  simi- 
lar functions.  I  can  tell  you  something  about  the  present  conditions 
there.  There  are  two  classes  of  discrimination  that  go  on.  One  is 
the  regular  case  of  the  big  fellow  trying  to  squeeze  the  little  fellow, 
shipper  or  owner.  The  sea-transportation  men  favor  the  continu- 
ous customer  against  an  occasional  customer  who  wants  to  build  up  a 
new  trade,  and  another  class  of  carrier  who  is  trying  to  monopolize 
entirely  a  certain  line  of  trade  so  that  his  friends  or  his  associates  or 
those  interested  in  a  certain  line  of  trade  may  have  a  monopoly. 
That  is  going  on  all  the  time.  How  much  that  is  going  to  be,  we,  of 
course,  will  know  accurately  before  very  long. 

We  took  this  class  of  work  up  with  the  interstate  commerce  people 
and  figured  as  to  the  prospective  business  under  that  head  that  we 
might  have  300  cases  to  investigate  a  3'ear.  That  investigation  re- 
quires an  examiner  or  a  member  of  the  board,  and,  so  far  as  possible, 
it  should  be  a  member  of  the  board  so  that  he  can  keep  in  touch  with 
actual  business  conditions  as  he  moves  from  port  to  port,  going  out 
to  the  district  in  which  the  alleged  violation  has  transpired  and  sit- 
ting there  and  taking  testimtmy  and  having  an  expert  and  possibly 
an  attorney  Avith  him.  The  expenses  of  the  Interstate  Commerce 
Commissicm,  we  are  informed,  are  about  $500  a  case  for  that  class  of 
investigations.  A  very  large  portion  of  that  is  in  the  cost  of  the 
copies  of  the  testimony,  the  record.  Taking  300  cases  at  $500  each 
would  bring  us  up  to  the  neighborhood  of  $150,000.  Our  figures  run 
up  in  the  neighborhood  of  $1()0,000,  because  they  include  other  oper- 
ations shown  by  the  chart  of  organization. 

Mr.  GiLLETT.  Would  not  your  jurisdiction  overlap  the  Interstate 
Commerce  Commission  ? 

Mr.  Denman.  Not  in  that  class.  There  may  be  ovcrlapi)ing  juris- 
diction. We  are  going  to  be  very  careful  to  avoid  that,  because  they 
luive  the  sujjcrior  power  over  us;  wherever  there  is  a  conflict  they 
prevail.    What  we  want  to  do  is  to  protect  the  shipping,  not  gather 


UNITED    STATES    SUIPPINU    BOARD.  7 

power.  The  Interstate  Commerce  Commission  is  very  efficiently 
doing:  many  things  that  come  within  that  class  of  juriscliction. 

Mr.  SiiKHLKY.  Is  not  the  trade  commission  in  that  field  also  to  a 
certain  extent? 

Mr.  Den  MAN.  Merely  for  the  purpose  of  reporting.  I  do  not 
tliinlv  they  have  the  general  power  of  investigating  discriminations 
in  transportation  on  the  water  and  to  impose  fines  and  penalties. 

Mr.  Shkhlet.  But  they  are  supposed  to  look  into  the  question  of 
unfair  competition? 

Mr.  Den  MAN.  Yes,  sir. 

Mr.  Sherley.  In  this  case  you  are  estimating  on  the  basis  of  about 
300  cases  a  year.  Have  you  any  real  basis  for  an  estimate  as  to  the 
extent  of  these  cases? 

Mr.  Den  MAN.  When  you  consider  the  hundreds  of  thousands  of 
individual  shipments  in  water-borne  interstate  and  foreign  com- 
merce, it  is  much  too  small.  We  are  not  going  to  expand  the  em- 
ployees in  this  division  until  the  actual  need  arises,  and  we  will  not 
broaden  the  agency  of  the  board  until  the  business  comes  in  to  be 
performed  by  the  board. 

There  is  one  class  of  cases  that  is  coming  in  all  the  time — peace 
and  wai-  times. 

Now  couie  the  war  cases.  The  foreign  shipping  lines,  and  now 
their  (rovei-nments,  have  constantly  discriminated  against  or.r  Amer- 
ican merchants  in  oversea  transportation.  You  can  not  cavil  at  that. 
That  is  perfectly  natural  for  them  to  do.  The  result,  however,  is  that 
the  American  merchant  is  being  trimmed  out  of  his  business. 

Mr.  GiLLETT.  You  mean  that  they  are  using  their  w-ar  power  for 
the  definite  purpose  of  helping  their  trade  and  hurting  ours? 

Mr.  Denman.  No:  not  necessarily,  but  at  least  for  the  definite 
purpose  of  helping  their  trade,  w^hich  they  can  tax.  They  sa}^  "  Our 
merchants  are  bearing  the  taxation  of  the  war  and  that  it  is  entirely 
justifiable.  We  should  help  them  out."  That  is  the  instinct  of  every 
British  and  German  shipowner;  it  is  the  instinct  of  every  British 
and  German  captain;  and  it  is  the  pride  of  every  British  and  Ger- 
man commission  house. 

There  are  4.000  alleged  complaints  of  this  class  of  discrimination 
now  in  the  State  Department,  and  during  the  last  year  there  has 
been  a  falling  off,  merely  because  the  complainants,  or  the  possible 
complainants,  have  felt  that  nothing  is  being  done  for  them.  When 
we  open  up  our  channel  of  redress  that  rate  of  4,000  in  two  years  is 
going  to  be  accelerated  rather  than  diminished,  and  we  have  got  to 
take  care  of  these  complaints. 

The  manner  in  which  these  cases  arise  is  this:  You  are  a  New 
York  mechnnt  and  3'ou  have  a  customer  in  Holland:  jou  have  had 
him  for  30  years  and  you  want  to  sell  him  a  bill  of  neutral  goods. 
The  customer  is  not  a  part  of  a  certain  oversea  trust  and  he  is  not  in 
with  the  crowd  that  is  running  things  between  Holland  and  certain 
other  foreign  countries.  You  go  down  to  the  ship  with  your  parcel 
of  goods  and  the  bill  of  lading  and  hand  it  to  the  master  of  the  vessel, 
who  is  neutral.  It  is  the  Holland-American  Line,  for  instance.  He 
says,  "  I  am  very  sorry,  but  you  have  not  your  letters  of  assurance," 
and  you  say,  "What' the  devil  are  those?"  and  the  captain  says, 
•'That  is  something  you  get  from  a  certain  foreign  trade  ao:ent,'so 


8  UNITED   STATES   SHIPPING   BOARD. 

and  so,'  or  his  assistants."  Then  you  go  around  to  "  so  and  so  " — that 
is,  if  3^ou  can  stomach  it — and  you  say,  "  Please,  may  I  trade  with  my 
old  customer  of  30  years  over  there?  I  want  to  sell  him  some  liver 
pads.  He  has  been  buying  this  American  nostrum  all  these  years." 
Then  "  so  and  so  "  says  "  That  is  very  nice,  but  3'our  customer  is  not  in 
with  the  trust,  and  we  are  controlled  b}^  some  orders  that  make  it  im- 
possible for  us  to  give  these  assurances.  Of  course,  we  do  not  say  you 
can  not  put  your  goods  on  this  vessel,  but  we  can  not  give  you  the 
letters  of  assurance."' 

You  go  back  and  persuade  the  Holland-American  captain  to  ^o 
to  sea  with  his  vessel  with  goods  to  your  old  customer  which  are 
neutral  goods.  The  vessel  is  overhauled  by  a  man-of-war,  because 
the  items  of  the  ship's  manifest  probabl}''  will  get  around  to  "  so  and 
so,"  the  foreign  consular  agent.  The  vessel  is  overhauled  by  a  man- 
of-war  and  taken  into  a  certain  foreign  port.  Xow,  what  happens  in 
that  port  is  simply  the  ordinary  visitation  and  search,  and  they 
spend  a  lot  of  time  viseing  and  searching  the  vessel,  and  they  do  not 
fmd  anything,  and  after  the  vessel  has  lost  perhaps  ten  or  fifteen 
thousand  dollars  in  demurrage  she  continues  on.  The  Holland- 
American  Line  has  possibly  got  freight  from  you  amounting  to  about 
$500,  and  has  paid  ten  or  fifteen  thousand  dollars  in  demurrage  to 
get  the  vessel  to  its  destination.  It  is  very  natural  they  are  not  going 
to  accept  business  under  those  circumstances:  but  they  have  declined 
to  perform  the  duty  of  a  common  carrier  if  they  do  not  accept  your 
goods,  and  the  shipper  may  have  his  right  against  that  company,  and 
he  can  enforce  his  right  before  our  body,  if  the  facts  are  as  I  have 
described  them,  and  Ave  have  got  to  adjudicate  the  case.  Xow.  it  is 
entirely  conceivable,  if  the  war  continues  for  a  couple  of  years,  wc 
will  have  a  couple  of  thousand  more  of  those  cases. 

The  Chairman.  Mr.  Denman,  there  are  cases  like  this  of  which 
I  have  knowledge:  A  concern  in  New  York  which  imported  bulbs 
from  Holland  for  years  had  a  number  of  shipments  sent  over  here, 
and  the  mails  in  which  the  invoices  were  being  transported  were 
seized  and  examined  and  detained.  The  merchant  or  importer  goes 
to  the  customhouse  to  get  out  his  goods,  and  has  no  invoice.  He 
can  not  get  them  out  even  by  giving  a  bond,  because  he  can  not  iden- 
tify or  locate  them.  Several  weeks  afterwards  the  invoices  come  over, 
and  they  deliver  the  goods,  which  are  of  a  perishable  charactei-,  and 
are  then  of  no  value.  Does  your  board,  under  the  law,  have  authority 
to  investigate  such  cases? 

Mr.  Denman.  Yes;  whether  or  not  we  have  jurisdiction  to  award 
damages,  we  may  have  to  examine  it  to  determine  whether  it  is  con- 
nected with  the  matters  under  section  26  of 

The  Chairman  (interposing).  This  is  a  claim  now  against  an  alien 
or  a  foreign  Government. 

Mr.  Denman.  Strangely  enough  Congress  has  given  us  the  duty  of 
investigating  that. 

The  Chairman.  Where  is  that  in  the  law? 

Mr.  Denman.  Section  2G  of  the  law,  page  10.  We  can  not  award 
damages  under  that  section,  but  we  can  investigate  and  are  compelled 
to  investigate. 

The  Chairman.  That  would  be  a  matter,  at  any  rate,  for  rej^re- 
sentation  through  diplomatic  channels? 


UNITED    STATES    SILIPPINU    BOARD.  9 

Mr.  Dknman.  Yes;  but  Congress,  as  I  understand  it,  has  instructed 
us  to  prepare  the  story  and  the  reason.  As  we  understand  it,  wliat 
Congress  had  in  mind  when  it  gave  us  tliis  authority  was  that  it 
wanted  us  to  study  (hiring  the  war  the  conditions  that  wouhl  un- 
doubtedly prevail  after  the  war.  when  the  European  nations,  having 
nationalized  their  resources,  begin  to  compete  with  us  as  national 
units.  If  Congress  did  not  have  that  in  mind.  I  am  sorry,  because  it 
must  be  perfectly  apparent  to  anybody  who  has  studied  European 
conditions  to-day  that  Europe  intends — each  country  possibly  by 
itself — to  enter  into  the  world  of  trade  as  if  entering  into  a  big  inter- 
national w^ar,  and  the  instrumentalities  they  will  use  will  be  all  the 
instrumentalities  of  government. 

You  know  about  the  bunkering  agreements  which  they  now  liave. 
under  which  they  are  squeezing  everything  into  tlie  line  of  their 
trade  and  the  ways  they  want  their  trade  to  run  our  sliips.  I  had 
a  client  in  San  Francisco  who  had  a  bill  of  goods  for  Manila.  This 
man.  of  an  American  house,  was  on  the  black  list,  and  was  the  largest 
American  exporting  house  on  the  Pacific  coast  outside  of  a  certain 
foreign  house.  He  wanted  to  send  a  bill  of  goods  to  Manila  to  an 
old  customer.  He  found  that  the  American  steamship  line  going 
ther*  would  not  take  his  goods,  because  the  steamship  line  had  a 
bunkering  agreement  with  a  certain  European-owned  port  in  China, 
which  made  them  agree  not  to  carry  goods  for  a  blacklisted  i)erson. 
Now.  this  was  an  American  house,  50  years  old,  with  a  competitor  who 
was  a  member  of  the  legislative  branch  of  a  foreign  government,  try- 
ing to  send  his  goods  on  an  American  steamship  line  to  an  Ameri- 
can customer  in  the  Philippines,  and  was  not  able  to  get  it  there. 
Xow,  I  take  it  what  Congress  wants  us  to  do  under  section  26 

Mr.  GiLLETT  (interposing).  By  bunkering  agreement,  you  mean 
they  had  to  take  their  coal  from  them? 

Mr.  Denmax.  Yes. 

Mr.  GiLLETT.  It  is  not  a  great  distance  from  China  to  Manila, 
and  I  should  not  think  that  would  make  very  much  difference. 

Mr.  Denmax.  No;  but  it  is  coming  back.  With  the  value  of  their 
tonnage  to-day  for  purposes  of  carriage,  they  do  not  want  to  have  to 
carry  all  the  return  coal  out. 

Mr.  (tillett.  And  they  can  not  get  it  at  Manila? 

Mr.  Den:max.  No:  and  consequently  they  have  got  us,  and  they 
have  got  the  world.  Talk  about  freedom  of  the  seas,  if  they  want 
to  exercise  their  power  there  is  no  such  thing  as  commercial  freedom 
of  the  seas.  We  laugh  at  certain  people  for  using  that  phrase,  but 
it  is  a  vital  phrase  when  it  comes  to  conmiercial  Avarfare.  They  have 
got  the  freedom  of  the  seas  for  themselves  because  they  have  got 
control  of  the  necessities  of  steamships. 

We  see  a  way  out  of  that  for  us  in  the  use  of  the  Diesel  engine, 
which  gives  an  enormous  sailing  radius  to  an  oil-burning  vessel. 
You  can  go  almost  clear  around  the  world  with  the  oil  in  your 
water-bottom  space  with  a  Diesel  engine.  The  Scandinavian  and 
Danish  ships  are  already  doing  almost  that.  I  have  clients  who 
come  to  California  with  the  oil  they  have  taken  on  in  Norway. 
Ultimately  we  are  going  to  get  around  the  difficulties  we  now  have, 
but  no  vessels  burning  coal  can  do  anything  but  sign  the  bunkering 
agreements  mentioned. 


10  UNITED    STATES    SHIPPINC4    BOARD. 

Xow.  I  take  it  that  under  section  26  it  is  our  business  to  investi- 
gate whenever  a  comphiint  is  made  to  us.    That  section  provides: 

The  board  shall  have  power,  and  it  shall  be  its  duty  whenever  complaint 
shall  be  made  to  it.  to  investigate  tlie  action  of  any  foreiiin  irovernnient  with 
respect  t(<  the  privileges  afforded  and  bnrdens  imposed  npou  vessels  of-  the 
United  States  enjiaged  in  foreign  trade  whenever  it  sliall  appear,  etc. 

The  Chairman.  The  case  to  which  I  have  referred  does  not  affect 
vessels,  does  it?    This  was  a  case  of  taking  and  searching  the  mails. 
■Mr.  DEx:>rAX.  That,  of  course,  is  beyond  us.     I  thought  it  had  to 
do  with  the  control  of  the  invoice  of  ithe  ship  or  the  control  of  the 
bill  of  lading  of  the  ship  itself.     It  is  a  part  of  our  duty  of  com- 
parison of  American  and  foreign  shipping  conditions. 
Mr.  Brext.  It  does  affect  the  goods  as  well  as  the  ship. 
Mr.  Chairman.  My  understanding  is  that  they  seized  the  mails. 
It  may  be  the}'^  took  the  ship's  manifest  and  held  that  up. 

Mr.  Denmax.  And  took  the  shipping  papers,  the  actual  bills  of 
lading,  and  held  them. 

Mr.  Brent.  That  section  goes  on  to  say :  "  Or  in  respect  of  the 
passage  or  transportation  through  such  foreign  country  of  passen- 
gers or  goods  intended  for  shipment  or  transportation  in  such  vessels 
of  the  United  States." 

It  covers  goods  as  well  as  vessels. 

Mr.  Denman.  There  are  two  classes  of  functions  there,  as  you  can 
see.  One  is  a  discrimination  that  ordinarily  comes  under  our  juris- 
diction in  time  of  peace,  a  discrimination  which,  whether  it  arises  out 
of  warfare  or  otherwise.  Ave  have  got  to  take  notice  of:  and  the  other 
is  a  discrimination  of  a  foreign  government  itself  under  section  2G. 

Xow.  when  the  war  is  over  other  foreigners  who  have  not  j'et 
had  the  chance  are  going  to  treat  us  just  as  badly,  because  in  the 
South  American  trade  the}''  are  now  discriminating,  or  were  before 
the  war  began,  by  throwing  ever}^  possible  ton  of  shipping  of  the 
manufactured  products  of  their  countries  down  to  South  America 
direct,  and  only  bringing  the  raw  materials  from  South  America  up 
here.  They  complete  the  third  leg  of  the  voyage  back  to  Europe 
with  American  raw  material  to  iMirope,  thus  giving  a  continuo\is 
floAv  of  their  vessels  so  their  manufactured  products  go  to  South 
America  while  none  of  their  tonnage  sei'ved  our  trade  to  that  port. 
And  I  have  no  doubt  all  of  them  will  do  this,  both  the  Ciermans 
and  the  English.  I  am  shipping  on,  say,  an  English  line  from  Cali- 
fornia to  Liverpool.  I  have  a  customer  over  there,  and  my  British 
commercial  rivals  in  San  Francisco  want  to  get  my  tratle.  The  re- 
lationship between  the  British  shipping  house  and  commission  house 
and  the  British  steamship  line  is  very  close,  and  very  soon  I  find 
that  a  smart  Britisher  comes  to  me  and  says,  "  You  are  selling  to 
so  and  so  in  Great  Britain.  Now.  3'our  profit  is  such  and  such.  The 
cost  of  transportation  is  so  much.  We  will  buy  those  goods  from 
you  right  here  in  San  Francisco  at  the  dock  and  pay  you  enough  to 
give  you  the  same  or  better  profit.''  I  think  it  o\er  and  say,  "  Heav- 
ens alive!  All  my  business  through  that  British  steamship  line  is 
goind  to  be  viseed  in  this  same  way.  I  have  not  got  a  chance.  I 
had  better  sell  right  hei-e  now."  Now,  the  British  house  gets  that 
foi'eign  customer,  keeps  the  trade  for  itself,  and  makes  all  the  in- 
termediate profits  of  trad(>.  That  is  another  form  (»f  disci-iuiiiia- 
tion. 


rXiTED    STATKS    SIIII'IMNC    I'.OAUI).  11 

Germany  will  do  the  Siinu'  thing,  and  1  ha\e  an  idea  if  we  ever 
got  into  the  game  Ave  would  be  doing  the  same  thing,  because  that  is 
human  nature,  and  we  are  all  alike.  The  (juestion  i.s  whether  or  not 
we  are  going  to  have  the  instrumentalities  and  power  to  get  around 
those  things,  because  we  can  not  change  human  natiii-e,  or  whethci' 
wo  are  going  on  in  the  same  laissez  faire  method -which  has  put  all 
our  foreign  connnerce  or  a  vei'V  large  poi'tiou  of  it  in  the  hands  of 
other  people.. 

Mr.  GiLLETT.  I  thought  the  ti'ani])  steamers  did  the  greater  pai't 
of  this  transportation  and  would  not  be  subject  to  such  control. 

Mr.  BuEXT.  There  has  not  been  a  tramp  steamer  of  any  value  in 
the  (lulf  for  10  years.  Our  Gulf  trade  is  absolutely  conti-olled  by 
the  liners. 

Mr.  GiLLETr.  AMiat  do  you  mean  by  the  Gulf? 

Mr.  Brent.  I  mean  the  Gulf  coast — Xew  Orleans.  Mobile,  Gal- 
veston, etc.     It  is  liner  business.     We  do  not  know  any  other. 

Mr.  Denmax.  That  whole  tramp-steamer  discussion  arose  out  of 
the  commerce  of  the  port  of  New  York.  Xew  York  is  so  near  to 
Washington  that  it  gets  its  story  in,  but  the  exact  reverse  exists  with 
regard  to  the  potential  commerce  of  the  Pacific.  Xow,  the  trans- 
Pacific  commerce  used  to  be  done,  25  per  cent  of  it,  by  American 
bottoms;  that  has  been  cut  down,  Ave  are  reliably  informed,  to  be- 
tween 2  and  3  per  cent  through  the  competition  of  the  Japanese 
and  by  the  enormous  freights  that  the  Atlantic  side  now  offers.  But 
whatever  may  be  the  cause  of  its  leaving  us,  the  Japanese  have  gotten 
it.  They  are  potentially  the  greatest  maritime  nation  in  the  world. 
Their  skill  in  handling  their  fleet  is  marvelous.  Xow,  we  want  our 
ships  to  go  back  there,  and  Ave  want  to  return  Avith  regular  estab- 
lished liners,  so  our  merchants  can  have  a  regular  service  betAveen 
their  San  Francisco  houses  and  their  Asiatic  houses.  But  Avhat  is 
likely  to  happen  is  this :  As  soon  as  they  attempt  to  do  that  the  Japa- 
nese may  come  in  and  take  the  "  velvet  '■  out  of  the  transportation  of 
the  American  liner  competitor.  Their  governmental  organization  is 
so  perfected  that  it  may  be  A^ery  difficult  for  us  to  stop  that  b}^  anv 
form  of  regulation.  We  are  not  asking  the  power  to  regulate  tramps, 
but  Ave  ought  to  have  the  poAver — and  Ave  are  asking  for  it  in  a  bill 
noAv  before  Congress — to  be  able  to  interrogate  the  Japanese  tramp, 
so  that  we  will  be  able  to  fortify  the  felloAVs  Avho  Avant  to  go  into 
ther  trans-Pacific  business  with  a  regular  line  by  such  legislation 
and  regulation  as  may  be  shown  by  actual  experience  to  be  Avise.  In 
other  Avords,  Avhatever  certain  Congressmen  may  knoAv  that  entitles 
them  to  say  the  liners  are  a  wacked  band  of  robbers  on  the  Atlantic 
side,  they  are  the  people  Ave  must  look  to  to  give  us  our  regular 
Asiatic  trade  on  the  Pacific. 

Nobody  saAv  auA"  virtue  in  the  liners'  organization  at  the  time  the 
power  over  the  tramp  Avas  taken  aAvay  from  us.  They  Avant  to  leave 
the  tramp  as  an  uncontrolled  regulator  of  trans-Atlantic  rates.  What 
Ave  want  to  do  is  to  leave  him  as  an  uncontrolled  regulator  of  rates, 
but  to  haA'e  the  poAver  to  study  him  on  the  Pacific  and  elsewhere,  so 
that,  after  we  have  gotten  the  statistics  and  information  Ave  need, 
we  can  really  regulate  him  in  some  Avay  or  other  so  that  he  giAes  our 
American  line  a  chance.  We  are  asking  for  an  amendment  giving 
us  the  power  not  to  regulate  but  to  investigate  the  tramp  competi- 
tion.   This  will  take  some  of  the  monej-  Ave  are  asking  for. 


12  UXITED    STATES    SHIPPING   BOAED. 

The  Chairman.  Suppose  you  go  on,  Mr.  Denman,  and  take  up 
these  divisions. 

UIVISIOX    OF    WAU   DISCKIMIXATIOXS. 

Mr.  Denman.  The  second  division  is  a  division  of  discriminations 
that  are  of  a  war  character.  I  think  they  will  continue  after  the 
military  war  is  over  and  our  trade  wars  begin,  but  there  are  4,000 
cases  pending  now,  and  we  may  anticipate  there  Mill  be  a  very  large 
number  hereafter  that  we  will  have  to  investigate  and  actually  to 
try  for  the  purpose  of  assessing  damages. 

The  Chairman.  You  estimate  j'ou  will  spend  from  $12,000  to 
$20,000  a  month  on  that  work,  do  you  ? 

Mr.  Denman.  Yes ;  and  maybe  very  much  more.  If  so,  we  can  come 
to  Congress  and  obtain  an  emergency  appropriation  next  fall.  We 
do  not  fear  that  Congress  will  not  respond  if  we  have  actual  facts 
to  show  such  increased  needs. 

DIVISION    OF   VESSELS    AND    TERMINALS. 

In  the  division  of  vessels  and  terminals 


The  Chairman.  Is  this  to  be  a  construction  bureau  or  division? 

Mr."  Denman.  Yes.  This  division  is  dual  with  reference  to  the  two 
functions  we  have  referred  to.  We  are  supposed  to  buy  and  construct 
vessels,  and  we  are  at  the  same  time  supposed  to  assist  in  devising 
types  that  will  meet  these  emergencies.  For  instance,  I  was  speaking 
of  coaling  ports.  We  must  assist  in  the  development  of  the  type  that 
will  carry  our  goods  without  the  need  of  stopping  at  foreign  coaling 
ports.  We  must  have  immediatel}^  pretty  wide  study  of  that  subject. 
We  have  got  to  spend  experimental  money.  The  money  that  is  spent 
on  the  actual  construction  of  the  vessel  will  be  paid  out  of  the  $50,- 
000,000,  but  the  supervision  of  it  will  fall  in  this  division  of  vessels 
and  terminals,  and  there  we  have  provided  a  list  of  employees,  naval 
architects,  and  inspectors,  which  is  comparatively  small.  It  is  a 
necessary  part  of  the  functions  of  the  board  and  a  very  important 
part  of  the  functions  of  the  board.  It  is  both  for  the  construction 
of  our  own  vessels  and  to  aid  others  by  our  tjqies  developed.  We 
will  lose  some  money  in  failures  of  types,  but  we  Avill  get  it  back  a 
thousandfold  if  we  succeed. 

The  CuAnniAN.  Will  your  work  under  this  division  in  any  nay 
duplicate  the  work  of  the  Steamboat-Inspection  Service? 

Mr.  Denman.  No;  not  in  the  least. 

The  Chairman.  Your  inspecticm  will  not  be  for  the  i)uri)()se  of 
ascertaining  the  seaworthiness  of  vessels  actually  in  trade? 

Mr.  Denman.  No;  other  than  our  own  fleet.  'We  will  have  to  keep 
our  own  fleet  chartered  out  to  carriers. 

The  Chairman.  That  would  be  the  work  that  any  commercial  con- 
cern would  do  itself  primarily? 

Mr.  Denman.  Yes. 

The  CiiAiR^rAN.  It  will  not  be  for  the  purpose  of  ascertaining  the 
seaworthiness  of  vessels  not  under  your  control. 

Mr.  Denman.  No;  on  the  other  hand,  the  ex})erimental  and  sci- 
tntific  side  of  it  will  recjuire  the  inspection  of  a  great  many  vessels 
r.ot  for  the  advice  of  their  owners  but  for  our  advice  in  developing 


UNITED   STATES   SKIPPING   BOARD.  13 

the  type,  and  for  that  work,  of  course,  we  must  ^et  some  excep- 
tionally fjood  men.  We  can  not  get  cheap  men  for  that  work  and 
ari'ive  anywliere. 

DIVISION     OK     SHIPIMNO     MANAOEMKNT. 

Now  that  last  section  concerns  structure  and  the  building  of 
vessels,  and  the  next  division  concerns  the  management  of  the  char- 
tered fleet.  You  must  have  a  man  who  is  looking  after  your  ton- 
nage, whether  you  charter  it  or  own  it,  and  somewhere  in  that  line 
you  have  got  to  have  a  vei-y  expensive  man.  You  have  to  employ  a 
man  on  a  par  with  the  big  shipping  companies  in  New  York,  and 
tliey  pay  from  $20,000  to  $50,000  a  year.  We  have  got  to  get  some 
one  man  of  that  type. 

The  Chairman.  Do  you? 

Mr.  Denman.  Oh,  yes. 

The  Chairman.  Why? 

Mr.  Denman.  Because  the  control  of  your  fleet,  chartered  to  mer- 
chants under  charters  outlining  the  proposed  trade,  is  a  very  highly 
skilled  profession.  You  get  your  information  as  to  what  the  big 
men  are  doing  by  contract  with  them.  We  can  not  go  in  and  take 
a  partner,  an  American  house,  and  haul  that  fellow  up  before  the 
board  and  exact  from  him  his  business  knowledge  to  find  out 
Avhether  we  will  charter  what  he  terms  a  competitor:  and  we  must 
have  a  man  who  knows  the  game  in  New  York  and  San  Francisco 
and  is  in  constant  touch  and  knows  the  men.  in  order  to  carry  on 
the  business.  You  see  we  are  outside  of  the  ordinary  governmental 
functions.  Congress  has  put  us  in  business,  but  with  the  instruction 
tliat  no  board  of  directors  ever  gives  its  agents,  namely.  '•  Do  not 
destr(\v  other  American  traders  in  building  up  your  own."  I  antici- 
])ate  you  do  not  expect  a  dividend  from  us.  save  in  the  national  bene- 
fit from  the  newly  developed  trade. 

The  Chairman.  That  type  of  man  who  acts  as  a  broker 

Mr.  Denman.  No;  this  is  not  a  broker. 

The  Chairman.  I  mean  the  man  who  is  chartering  the  ship  and 
then  peddling  the  space :  that  is  the  type  of  man  you  have  in  mind  ? 

Mr.  Denman.  Oh.  no:  we  will  like  to  have  a  man  with  the  skill  of 
such  men  as  Mr.  Franklin  or  Herr  Ballin,  the  German,  who  Avould 
feel  at  the  same  time  that  his  board  of  directors  were  the  American 
people.  Gen.  Goethals  was  such  a  man,  but  he  was  not  trained  in 
this  profession.  Herr  Ballin  is  great  because  he  is  able  to  picture  the 
whole  world  of  moving  commerce.  He  is  able  to  tell  Avhether  or  not 
there  is  going  to  be  a  drought  in  this  country  which  will  destroy  crops 
here,  whether  or  not  there  will  be  a  tremendous  shipment  of  cattle 
out  of  a  certain  district  because  there  is  not  feed  for  them,  whether 
or  not  Eussia  is  producing  a  certain  amount  of  meat.  He  is  able  to 
get  a  comprehensive  world  grasj)  of  the  flow  of  overseas  commerce. 
(No  German  will  admit  there  is  another  quite  like  him  in  the  world, 
but  he  represents  in  some  respects  an  ideal.) 

Now,  those  are  the  men  who  create  successful  enterprises.  You  can 
not  get  them  cheap.  You  might  be  able  to  find  a  freak  somewhere 
who  had  not  been  recognized  and  who  had  not  been  broken  in.  but 
the  cliances  are  against  getting  such  a  man;  and  if  you  developed 


14  UNITED    STATES    SHIPPIXG    BOARD, 

such  a  man  he  would  probably  go  to  private  employment  if  he  got 
low  pay  from  us.  I  think  we  know  where  to  go  to  look,  but  it  will 
not  be  done  quickly. 

The  Chairman.  I  asked  you  about  the  type  of  man  you  have  in 
mind,  because  you  are  proposing  to  pay  him  from  $10,000  to  $18,000 
a  year. 

Mr.  Brknt.  That  is  right. 

Mr.  Denman.  I  am  quite  certain  that  when  we  pick  our  man  there 
will  be  an  awful  outcry,  because  we  will  probably  be  o'nliged  to  pick 
a  man  who  is  now  playing  in  the  game  for  somebody  else,  but  in 
whom  we  recognize  public  spirit.  That  clamor  will  be  in  our  ears 
and  not  in  anybody  else's.    But  we  are  ready  to  bear  it. 

DIVISION    OF   XAVA.I.   ArXILIARY,    NAVAL   RESERVK.    AND    ARMY    TKAN.SI'OKT.S. 

The  Chairman.  Your  next  division  is  the  Division  of  Xuval  Aux- 
iliary, Naval  Reserve,  and  Army  Transports. 

Mr.  Denman.  The  bulk  of  that  work  will  be  done  by  the  Navy 
officials  themselves,  by  assignment  to  us.  but  we  must  have  some  of 
our  own  men  in  there. 

The  Chairman.  Just  what  will  be  your  relation  to  Army  and 
naval  transports  and  auxiliaries? 

Mr.  Denman.  Here  is  very  likely  what  is  going  to  happen:  There 
will  be  a  group  of  young  merchants  in  New  York  who  have  got  pep 
and  ginger  in  them,  who  will  come  to  us  and  say,  "  Here,  we  want  to 
establish  a  line  to  South  America  "—and  we  want  to  get  those  boys 
in  the  game  if  Ave  can — and  we  will  say,  "  What  type  of  ship  do  you 
want?"  And  they  will  say,  "  AYe  want  a  half  passenger  and  half 
cargo  carrier."  The  Navy  Department  at  that  time  is  looking  for 
colliers  which  will  be  available  to  them  in  case  of  an  emergency. 
Now,  we  will  have  to  adjust  between  those  two  demands — the  demand 
of  the  merchants  and  the  demand  of  the  Navy  Department. 

The  Chairman.  You  mean  they  will  come  to  you  to  charter  a  ves- 
sel of  that  type  from  you  ? 

Mr.  Denman.  They  will  not  do  that.  They  will  come  to  us  and 
ask  us  to  build  a  vessel  and  charter  it  to  us. 

The  Chairman.  And  then  the  question  that  must  1)0  determined 
is  as  to  what  extent  you  yield  to  their  necessities  and  the  necessities 
of  the  (Tovernment  in  case  that  ship  is  to  be  taken  over? 

Mr,  Denman.  Yes. 

The  Chairman.  Aiul  that  will  be  one  of  your  dixisions? 

Mr.  Denman.  Yes. 

The  Chairman.  The  theory  is  that  all  these  vessels  that  will  be 
constructed  will  be  of  such  types  that  <hey  can  l)e  utilized  either  by 
the  Army  or  the  Nav'v  in  time  of  war? 

Mr.  Den  .MAN.  Yes.  Hut  the  Navy  has  come  to  recognize  that  it 
must  not  interfere  too  much  with  the  standard  merchant  type  of 
\essel. 

Capt.  Ya'jks.  or  t'oiir.se,  every  vessel  the  l)oard  builds  will  have  to 
pass  through  th<'  hands  of  some  naval  officer  or  naval  constructor  in 
refei'eiu-e  to  its  tyi)e.  and  slight  modilieations  may  have  to  be  matle 
in  a  vessel  so  as  to  make  it  suitable  for  a  naval  auxiliarv. 


UNITED   STATES   SHIPPING   BOARD.  15 

Mr.  Dkxmax.  There  is  another  function,  Mr.  Fitzgerald,  I  neg- 
lected to  mention,  and  that  is.  the  encourag^ing  of  the  white  boy  to 
go  to  sea  as  disinguished  between  the  yellow  |)oy  on  the  other  side 
and  the  brown  fellow  from  the  Malay  Straits:  that  is,  we  want  to  get 
our  w'hite  Americans  on  the  sea  as  far  as  we  can.  The  naval  aux- 
iliary end  of  it  is  one  of  the  places  where  we  can  help.  For  instance, 
if  you  can  create  a  permanent  naval  body  on  our  ships  which  is  of  a 
quasi-military  character,  such  as  the  English  have,  by  the  payment  of 
a  small  sum 

The  Chairman.  Make  them  a  part  of  the  reserve,  you  mean 'I 

Mr.  Denman.  Yes;  and  the  men  who  will  come  under  this  naval 
auxiliary  or  naval  reserve  station  of  the  plan  will  ha\e  that  in  mind 
also. 

The  Chairman.  Would  that  be  a  sufficient  inducement  to  encoui-- 
age  more  young  men  to  go  to  sea  ^ 

Mr.  Denman.  It  is  only  one  of  the  things  we  have  got  to  otter 
them.  The  wages  on  the  Pacific  to-day  and  in  the  trans-Pacific  trade 
are  Chinese  and  Japanese  wages.  There  is  not  a  chance  to  run  a 
white  man's  fleet  there  under  economic  conditions  in  the  absence  of 
high  war  bonuses.  Xow.  you  can  run  anything.  You  can  almost 
run  a  railroad  engine  across  the  Pacific  l)ecause  things  are  so  in- 
flated, and  thev'  can  put  white  men  or  anybody  on  ships  now :  but 
under  normal  conditions  there  is  no  chance  of  operating  any  of  the 
present  types  of  construction  there  to  beat  the  Japanese,  and  there 
will  have  to  be  something  a  great  deal  more  than  the  ofl'ei"  of  a 
dollar  or  two  a  month  as  a  naval  reserve  member,  such  as  to  buy  him 
a  uniform  and  all  that  sort  of  thing,  to  coax  our  boys.  This,  of 
course,  will  help  in  part. 

CHIEF  CI.KUK'S   OFVICK. 

The  Chairman.  The  next  is  your  chief  clerk's  oftice.  Under  your 
scheme  of  organization  you  estimate  for  50  clerks,  all  under  the 
chief  clerk,  to  be  distributed  in  these  various  divisions  as  the  recjuire- 
ments  of  the  divisions  necessitate. 

Mr.  Brent.  That  is  the  idea. 

The  Ciiair:man.  Is  the  great  bulk  of  the  administrative  function 
of  the  board  to  be  concentrated  in  Washington? 

Mr.  Brent.  Not  altogether,  l)ut  largely  as  to  clerical  force. 

The  CiiAiR^iAN.  Or  how  much  of  these  actix  ities  would  be  outside 
of  Washington  ( 

Mr.  Denman.  Here  is  what  will  happen:  There  will  have  to  he  a 
number  of  employees  at  the  different  i:)orts,  and  a  certain  amount  of 
clerical  work  there.  But  the  l)ulk  of  the  work  will  be  investigation 
of  complaints  Avith  the  investigators  going  out  and  trying  cases  and 
sending  their  reports  back  to  AVashington.  Those  men  will  be  travel- 
ing. A  man  will  try  three  oi'  four  cases  in  New  Orleans  and  then 
go  to  San  Francisco  or  Galveston,  or  over  to  Mobile,  and  then  return 
to  us;  but  this  clerical  force  is  the  force  in  Washington,  collating 
and  handling  and  administering  the  work  there. 

jNIr.  Brent.  It  includes  stenographers  and  filing  clerks  and  the 
Uke. 


16  UNITED  STATES   SHIPPING   BOAED. 

Mr.  Brent.  These  estimates,  Mr.  Fitzgerald,  are  necessarily  arbi- 
trary. We  have  assiiiped  so  much  work  in  connection  with  an  as- 
sumed number  of  cases,  and  the  fact  that  it  takes  just  about  so 
much  clerical  and  stenographic  work  to  maintain  your  organization. 

The  Chairman.  What  organization  have  you  at  present? 

Mr.  Brext.  Only  enough  for  the  preparation  of  the  estimates  and 
outline  of  our  plan. 

The  Chairman.  But  what  organization  have  you  now? 

Mr.  Brent.  We  have  three  stenographers  and  an  assistant  dis- 
bursing officer. 

The  Chairman.  You  have  now  five  commissioners? 

Mr.  Brent,  Yes;  five  commissioners. 

Mr.  Den  man.  We  have  three  private  clerks  to  the  commissioners. 
I  have  not  any  yet. 

Mr.  Brent.  And  I  have  not  one  yet. 

The  Chairman.  Mr.  Stevens  can  not  have  one  yet.  because  he  was 
onh^  named  yesterday  or  the  day  before,  so  where  has  the  third  one 
gone? 

Mr.  Brent.  The  third  one  is  a  law  clerk. 

The  Chairman.  Then  you  have  really  two  clerks  with  the  com- 
missioners. 

Mr.  Brent.  One  is  named  for  a  commissioner  who  may  take  him 
a  little  later  on,  but  he  is  now  doing  a  law  clerk's  work.  We  only 
got  a  disbursing  officer  yesterday  and  the  three  clerks  we  now  have 
are  loaned  to  us  by  other  departments. 

The  Chairman.  How  many  clerks  have  you  all  told? 

Mr.  Brent.  Three,  and  Capt.  Yates  as  a  consultant,  and  a  tele- 
phone girl. 

The  Chairivian.  That  is  your  whole  staff  so  far? 

jSIr.  Brent.  We  have  just  hired  one  man  thus  far,  and  the  others 
are  loaned  to  us. 

Mr.  Denman.  I  have  been  doing  all  the  law  work  and  we  have 
been  running  it  as  if  it  Avere  a  private  corporation;  that  is,  we 
had  a  rowboat  and  wanted  to  make  a  fleet  out  of  it.  In  further 
answer  to  your  question,  Mr.  Chairman,  I  desire  to  sa}'  we  have 
not  made  any  attempt  to  employ  anybody  until  our  fifth  member  is 
appointed  so  we  can  have  the  unanimous  consensus  of  the  board 
itself  on  the  personnel  of  its  appointees.  The  few  people  we  have 
around  us  have  been  persons  absolutely  necessary  for  us  to  even 
jot  down  the  outlines  of  our  proposed  organization. 

salaries. 

The  Chairman.  You  have  outlined  a  disbursing-office  force  con- 
sisting of  four  persons,  which  could  be  supplemented  by  any  clerical 
force  from  the  force  of  50  clerks  in  the  chief  clerk's  office  and  a 
division  of  dockets  and  documents  consisting  of  tAvo  persons.  Now, 
in  fixing  the  compensation  of  these  chief  clerks  and  assistants,  what 
did  you  take  as  the  basis  for  that? 

Mr.  Brknt.  Similar  enipluyeef^  in  the  Jnterstftte  Coninieive  Com- 
mission and  the  rate  of  puy  wldch  they  lecoived.  We  fixed  the  salary 
of  our  a.ssistant  (.lisl.mising  oflicer.  who  take-s  the  place  of  a  cashier, 
at  a  figure  slightly  leas  tlian  the  one  which  we  here  indicate.  We 
have  simply  put  hcn^  the  skeleton  of  an  orgauiz.atJt)U  Tfhich  is  based 


UNITED   STATES   SHIPPING   BOARD.  17 

on  the  same  kind  of  organization  in  the  Intcrstaci'  ("oiniiu'rce  ("om- 
mission. 

The  Chairman.  Under  the  hiw  all  of  yonr  employees,  with  the 
exception  of  the  secretary 

Mr.  Brent.  We  have  not  hired  a  secretary  yet. 

Mr.  Dknman.  We  are  going  to  build  up  our  organization  around 
our  functions  as  we  exercise  them.  We  know  our  business  from  the 
ground  up  and  want  to  do  the  first  woi-k  ourselves,  as  far  as  possible. 

The  Chairman.  Under  the  law,  with  the  exception  of  the  secre- 
tary, a  clerk  to  each  commissioner,  attorneys,  naval  architects,  and 
such  special  experts  and  examiners  as  the  board  fnmi  time  to  time 
find  necessary  to  employ  for  its  work,  all  employees  of  the  board 
shall  be  appointed  from  lists  of  eligibles  to  be  supplied  by  the 
Civil  Service  Commission  in  accordance  with  cjvil-service  law? 

Mr.  Brent.  Yes. 

The  Chairman.  What  class  of  employees  come  within  this  desig- 
nation of  special  experts  and  examiners?  • 

^Ir.  BuENT.  Those  who  have  a  star  before  them  on  the  list. 

The  CiiAiRMAX.  I  understand  that,  but  you  have  indicated  here 
in  your  outline  of  organization  those  employees  who  are  not  to  be 
drawn  from  the  classified  list,  and  in  various  places  you  have  some 
such  positions  as  chief  examiner  and  assistant  chief  examiner  and 
special  examiner,  experts  and  investigators,  now  what  class  of  work 
are  they  to  perform  and  what  would  be  the  general  (jualifications  of 
the  men  re(]uired  to  perform  the  work  you  have  in  mind?  You 
have  indicated  there  are  certain  positions  that  will  not  be  within 
the  classified  service.  Xow,  what  class  of  work  Avill  be  done  by  per- 
sons filling  those  positions  and  what,  in  a  general  way.  are  the  quali- 
fications required  of  such  persons? 

INIr.  Den  HAM.  First,  take  the  duties  that  are  analogous  to  the  In- 
terstate Commerce  Commission.  There  arises,  sa3\  a  charge  of  dis- 
crimination in  the  port  of  San  Francisco.  We  send  out  an  examiner 
and,  if  it  is  an  important  case,  probably  an  attorney  will  go  Avith  him. 
Xow,  the  chief  item  of  expense  in  that  examination  is  the  record.  If 
you  send  out  a  first-class  man  his  record  will  be  about  one-third  as 
much  as  the  record  of  a  man  who  does  not  know"  how  to  handle  him- 
self. 

The  Chairman.  Is  he  to  be  a  laAvyer? 

Mr.  Denman.  He  may  be  a  lawyer,  or  he  may  belong  to  that  body 
of  transportation  experts,  a  very  large  body  in  America,  which  has 
drawn  to  it  some  ver}'  shrewd  minds  and  very  able  and  efficient  fel- 
lows, when  they  are  good.  Now,  such  a  man  must  be  a  high-water 
man  for  efficient  service.  He  will  pay  his  salary  ten  times  over  in 
shortening  his  records,  and  proper  economy  in  our  administration 
will  require  us  to  use  the  greatest  of  discrimination  in  picking  out 
the  character  of  men  we  get  there. 

The  Chairman.  Do  you  mean  that  these  examiners  are  to  be  men 
who  have  peculiar  knowledge  regarding  shipping  transportation  and 
the  shipping  business? 

IMr.  Denman.  Yes:  or  the  type  of  man  who  can  develop  the  ca- 
pacity to  handle  shipping  accounts  and  shipping  transactions.     We 
expect  to  develop  some  young  men  who  can  do  that  if  they  show  the 
81961—17 2 


18  UNITED    STATES    SHIPPIXG   BOATED. 

exceptional  qualities  we  require.     The  most  of  the  men  will  be  of 
previous  specialized  experience. 

Mr.  Brent.  They  would  also  be  drawn  from  the  very  highest  class 
of  employees  of  exchanges,  State  railroad  commissions,  and  bodies 
of  that  character — experts  in  their  line,  who  have  had  a  great  deal 
of  experience  in  handling  intricate  traffic  problems.  Railroad  or- 
ganizations frequently  furnish  trained  minds  of  that  character. 

DISCRIMINATIONS   AGAINST   VESSELS   AND   SHIPPERS. 

The  Chairman.  You  are  asking  that  of  this  $700,000  $175,000  be 
restricted  to  the  investigation  of  discriminations  against  vessels  and 
shippers? 

Mr.  Denman.  Arising  out  of  war  conditions. 

The  Chairman.  It  does  not  say  that,  but  provides  that  $175,000 
of  this  appropriation  be  available  only  for  the  purpose  of  investiga- 
tion of  foreign  disprimination  against  vessels  and  shippers  of  the 
United  States. 

Mr.  Denman.  The  reason  we  segregated  it  in  that  way  is  because 
we  wanted  to  show  that  a  part  of  the  appropriation  arose  out  of  ex- 
traordinary conditions,  and  we  trust  (though  fear  the  contrary)  that 
this  demand  will  not  continue  after  the  war. 

Mr.  Sherley.  But  the  point  the  chairman  makes  is  that  while  it 
relates  to  a  certain  character  of  discrimination,  it  does  not  further 
designate  it  as  discrimination  arising  out  of  the  war. 
Mr.  Denman.  The  word  "foreign"  there  shows  that. 
Mr.  Sherley.  Except  that  thej^  might  be  of  a  class  that  would 
arise  in  normal  times  and  yet  be  foreign  ones,  and  we  rather  got  the 
impression  j^ou  were  dealing  with  matters  that  would  come  up  by 
virtue  of  the  European  war. 

Mr.  Denman.  Of  course,  any  such  subclassification  will  have  its 
rather  indefinite  fringes:  but  there  is  a  definite  body  of  cases  arising 
out  of  our  present  foreign  relations,  and  we  did  not  want  Congress 
to  have  the  impression  that  that  sum  of  $175,000  would  be  likely  to 
be  demanded  when  that  state  of  affairs  ceased.  We  do  not  consider 
it  normal. 

The  Chairman.  So  .that  eliminating  the  war  conditions  and  the 
discriminations  that  have  arisen  as  a  result  of  the  war.  your  request  is 
practically  for  $525,000  for  the  performance  of  the  functions  devolv- 
ing upon  you  under  the  shipping  act? 
Mr.  Denman.  Yes. 

The  Chairman.  You  are  asking  that  $100,000  of  this  particular 
sum  be  made  immediately  available.  Do  you  expect  within  the 
balance  of  this  fiscal  year  to  commence  the  investigation  of  these 
complaints? 

Ml'.  Denman.  If  we  do  not  have  war  we  will  commence  almost 
immediately;  we  must  commence  when  cases  are  presented  to  us.  I 
want  to  <nialify  that  last  statement  by  saying  that  the  President's 
proclamation  has  thrown  upon  us  the  viseing  of  all  ohai-tering  of 
American  ships  and  all  sales  of  American  ships  to  foreign  countries. 
That  is  a  function  not  contemplated  by  us  at  the  time  we  outlined 
this  plan  of  organization.  How  far  this  is  going  to  develop  as  an 
item  of  exj^ense  to  the  Government  we  can  not  tell.  We  have  been 
able  to  handle,  in  a  pivliminarv  way,  some  1'2  or  15  cases  that  have 


UNITED   STATES   SHIPPING   BOARD.  19 

come  in  Avliich  are  evidently  the  precursors  of  many  more  of  the  same 
type  Avithout  any  increase  of  our  forces.  The  reason  for  that  has 
been  that  they  are  matters  for  the  direct  determination  by  the  board 
itself.  Undoubtedly,  as  they  increase  a  very  considerable  clerical 
force  will  be  re(|uired  for  them.  It  will  be  our  endeavor  to  shape 
into  the  functions  of  the  clerks  we  have  provided,  the  performance 
of  these  extraordinary  duties. 

KENT  01'  QUAirn-UJS. 

The  Chairman.  Where  is  your  office  now? 

Mr.  Den.aean.  In  the  Munsey  Building. 

The  Chaikman.  Then  you  have  i-ented  quarters? 

Mr.  Den  .man.  Yes. 

The  CiiAiKMAN.  Have  you  any  definite  idea  of  the  amount  of 
space  you  are  going  to  require  in  Washington? 

Capt.  YA'n':s.  We  estimated  that  within  a  year  we  would  need 
somewhere  between  eight  and  nine  thousand  square  feet  of  space. 

Mr.  Denman.  You  will  notice.  Mr.  Fitzgerald,  that  in  our  sum- 
mary of  estimates  by  quarters  we  have  developed  a  growing  rate  of 
expenditure  that  fits  in  with  the  statement  we  made  that  we  want 
to  develop  the  organization  with  its  functions  and  not  try  to  start 
out  with  a  complete  organization  without  knowing  what  we  are  going 
to  do  with  it  by  actual  experience  and  contact  with  the  emergencies 
and  incidents  as  they  come  to  us. 

Mr.  Brent.  And  even  building  it  up  orraduallv.  it  amounts  to 
$700,000. 

EUROPEAN   GOVERNMENTS  FURTHERING   THEIR  FOREIGN    TRADE. 

Mr.  Sherlet.  Previously  you  Avere  speaking  of  the  activities  that 
would  unquestionably  come  on  the  part  of  European  Governments 
in  the  furthering  of  their  foreign  trade.  Could  you  tell  us  what 
their  activities  are  at  the  present  time  along  the  line  that  is  embraced 
within  the  purview  of  this  act? 

Mr.  Denman.  I  am  familiar  only  with  the  methods  of  the  British 
Government  in  connection  with  their  controlling  their  avenues  of 
transportation  to  subserve  the  national  needs,  both  as  to  the  supply 
of  food  and  necessaries  and  as  to  their  naval  operations. 

After  some  months  of  painful  experience  the  British  finally  devel- 
oped an  organization  which  is  administered  in  part  by  the  Admiralty, 
their  navy  department,  and  in  part  by  the  board  of  trade.  The 
British  Board  of  Trade  is  made  up  of  a  number  of  the  leading  mer- 
chants of  the  country  and  experts  of  various  kinds,  members  of  my 
profession  and  others,  and  is  headed  by  a  member  of  the  British 
cabinet.  Every  kind  of  British  shipping  to-day  is  under  the  direct 
control  or  the  powerfuul  indirect  control  of  one  of  these  two  agencies. 
The  direct  control  consists  in  their  commandeering  either  the  total 
vessel  or  a  charter  on  a  vessel  or  space  on  a  vessel^  that  either  one  of 
these  two  branches  of  the  Government  might  need.  The  indirect 
control  is  exercised  in  part  in  this  way. 

Early  in  the  war  the  British,  through  some  method  of  arbitration, 
determined  upon  the  chartering  rate  for  all  vessels  commandeered. 
The  chartering  rate  at  the  present  time  and  also  immediately  after- 


20  r XI TED  STATES  SHIPPING  BOARD. 

wards  reached  a  very  much  higher  point  for  general  uncontrolled 
commerce.  So  it  was  a  distinct  advantage  to  the  British  ship  owner 
not  to  be  commandeered.  In  commandeering  they  took  proportion- 
ately from  the  different  fleets  of  the  different  owners.  They  com- 
mandeered vessels,  leaving  to  each  one  of  the  ship  owners  a  certain 
number  that  they  are  free  to  operate  at  the  going  high  rates  of  charter 
and  carriage.  At  any  moment  they  may  commandeer  the  next  vessel. 
So  with  the  power  that  is  in  the  admiralty  and  the  board  of  trade 
they  are  able  to  suggest,  without  commandeering,  that  it  would  be 
advisable  for  the  vessel  to  go  to  this  place  or  that  place,  or  to  take 
care  of  this  trade  or  that  trade,  or  to  neglect  this  trade  or  that  trade. 
They  have  done  that,  nationalizing  their  commercial  resources.  They 
have  favoBcd  those  trades  which  are  distinctly  British  and  they  have 
neglected  other  trades.  Underneath  is  a  tremendous  stimulation  of 
the  business  of  certain  British  houses  and,  of  course,  a  great  neglect 
of  the  commercial  and  carrying  needs  of  foreigners.  It  is  incon- 
ceivable that  that  power  which  Great  Britain  has  developed  in  her 
governmental  agencies  is  ever  again  going  to  be  given  up.  It  may  be 
modified  hereafter,  but  wdth  men  of  the  type  now  iji  control  of  England 
it  will  never  be  lost.  Its  efficiency  far  exceeds  any  other  organization 
that  the  world  has  ever  known,  barring  possibly  that  of  the  Japanese 
Government  in  its  relationship  with  its  carriers.  The  Germans  will 
not  be  behind  them  when  the  war  is  over. 

When  America  tries  to  put  its  fleets  on  the  sea  at  the  termination  of 
this  war — I  am  speaking  now  of  its  merchant  fleets — it  is  goiiig  to 
meet  the  warring  competition  of  that  very  highly  developed  function 
of  Government.  AVe  are  going  to  have  a  very  hard  time  of  it,  unless 
something  like  that  is  developed  with  us. 

Success  in  developing  over-seas  trade  does  not  flow  either  primarily 
or  directly  from  cheap  and  efficient  methods  of  transportation,  but 
flows  from  the  combination  of  the  energies  of  the  merchant,  the  for- 
eign banking  branch,  and  of  the  carrier.  A  foreign  carrier  carrying 
for  the  American  merchant  to  South  America  with  a  large  fleet  can  so 
distribute  the  sailing  of  its  vessels  that  it  stimulates  the  trade  of  its 
own  carrier  and  depresses  the  trade  of  its  opponents.  You  can  do 
this  by  giving  an  insufficient  service,  by  failing  to  get  the  cargoes  of 
the  American  merchant  regularly  to  the  foreign  consumer,  and  fur- 
nishing regular  and  efficient  transportation  to  the  merchants  of  its 
own  country.  It  can,  through  such  a  line,  give  its  merchants  the 
information  that  it  gathers  in  the  carriage  of  cargo  for  its  alien 
competitors. 

Great  Britain  had  succeeded  before  the  war  by  a  uiarvelous  extra- 
governmental  coo])eration  between  its  merchants,  bankers,  and  its  sea 
carriers.  Until  the  war  only  in  part  have  the  energies  of  the  British 
Government  contributed  to  the  stimulation  of  those  trades,  but  dur- 
ing the  war  they  have  learned  to  combine  the  two,  and.  as  I  have  said, 
we  must  face  that  in<'r.eased  efficiency  flowing  from  that  kncnvledge  of 
the  use  of  these  powers. 

The  Chaikman.  You  sjioke  a  little  while  ago  of  the  dilliculty  that 
the  American  shipper  would  have,  and  has  now,  shi]iping  to  neutral 
counti-ies  on  neutral  ships  because  of  the  inability  to  got  letters  of 
assurance.  My  attention  was  called  to  a  case  of  this  character.  A 
New  York  merchant  was  approached  with  an  offer  for  certain  mer- 


UNITKD   STATES    SHIPPING    BOARD.  21 

chandise  to  be  shipped  to  South  America,  and  he  refused  to  enter  into 
any  negotiations  until  the  prospective  purchaser  had  obtained  some 
kind  of  a  consent  from  the  British  consul  that  -he  could  sell  those 
goods.    Is  that  the  letter  of  assurance? 

Mr.  Denman.  No,  sir;  that  is  another  implement. 

The  CiiAiiorAX.    Anotlier  form  of  discrimination? 

Mr.  Den:\ian.   Yes,  sir. 

Mr.  MoNDKLL.  Trulcr  your  contemplated  division  of  discrimina- 
tion of  foreign  governments  and  individuals  against  American  .ship- 
pers and  vessels,  it  is  your  duty  to  inquire  into  and  to  investigate 
the  action  of  foreign  governments  with  respect  to  the  privileges  af- 
forded and  to  the  burdens  imposed  upon  vessels  of  the  United  States 
engaged  in  foreign  trade,  etc.,  and  I  understand  that  you  are  hav- 
ing many  cases  lodged  with  you  direct  of  complaints  against  these 
discriminations  and  these  alleged  unfair  and  hostile  acts  of  foreign 
governments.  Are  they  coming  to  you  dii-ect  or  are  they  going  to 
the  State  Department!' 

Mr.  Dexmax.  They  are  going  to  the  State  Department.  The  rea- 
son they  are  going  to  the  State  Department  is  because,  up  to  the 
time  of  our  organization  on  January  30,  that  was  the  only  body  who 
had  that  duty.  They  have  accumulated  these  4,000  cases,  many  of 
which  will  fall  on  us.  and  Ave  have  got  to  investigate  all  of  them  for 
the  purposes  of  the  report  that  Congress  has  commanded  us  to  make. 

Mr.  MoNDKLi..  Those  cases  are  not  now  coming  directly  to  you; 
that  is,  the  parties  are  not  bringing  them  to  you? 

Mr.  Denman.  We  have  not  organized  for  that  purpose  yet.  We 
have  had  inquiries  as  to  when  they  should  be  presented. 

Mr.  MoNDELL.  Do  you  anticipate  taking  up  those  cases  that  have 
been  filed  in  the  State  Department  and  examining  them? 

Mr.  Den^fan.  If  we  follow  the  mandate  of  the  statute,  we  must 
do  it. 

Mr.  MoNDELL.  But  not  for  the  purpose,  however,  of  preparing  the 
cases  for  presentation  diplomatically? 

Mr.  Denman.  Xo:  not  our  diplomatic  presentation,  but  to  assist 
the  proper  diplomatic  officers. 

Mr.  MoNDELL.  For  the  purpose  of  reporting  to  the  President  and 
with  a  view  to  having  such  action  taken  as  will  prevent  a  recurrence 
of  that  sort  of  thing.    Is  that  it  ? 

Mr.  Denman.  That  is  one  part  of  our  function.  The  other  part 
is  to  hear  and  determine  and  assess  damages  where  the  vessel  being 
a  common  carrier  declined  to  accept  goods.  We  may  have  a  thou- 
sand such  cases — reasonably  expect  that  number.  Over  3,000  of 
these  cases  in  the  State  Department  could  have  come  to  us  if  we  had 
been  organized. 

Mr.  MoNDEEL.  I  am  not  speaking  of  that  class  of  cases.  I  am 
speaking  of  the  classes  of  cases  in  the  nature  of  claims  filed  in  the 
State  Department — I  did  not  know  but  what  the  cases  might  be 
brought  to  you  in  the  first  instance — charging  acts  of  hostility  or 
discrimination  by  one  or  the  other  of  the  warring  powers? 

Mr.  Denman.  As  that  claim  lies  in  the  State  Department  we  have 
got  to  examine  it  and  embody  it  in  our  report,  and  that  claim  also 
has  another  feature — the  ship  which  is  a  common  carrier  usually  is 
the  offender,  so  that  the  shipper  of  goods  may  not  only  have  a  claim 


22  UNITED    STATES    SHIPPING    BOARD. 

against  the  British  Government,  for  instance,  for  interference,  but 
they  have  a  claim  against  the  common  carrier  itself  for  having 
failed  to  perform  its  function. 

Mr.  jNIoNDELL.  But  man,y  of  these  cases  do  not  invoh  e  a  complaint 
against  the  carrier.  They  are,  for  instance,  for  detention  of  Ameri- 
can vessels  at  British  ports,  the  refusal  of  the  British  (Government 
to  allow  vessels  to  pass  into  alleged  blockaded  areas,  and  all  that 
sort  of  thing.  Those  are  really  complaints  made  as  the  basis  for 
claims  through  diplomatic  channels. 

Mr.  Dekma>.  We  are  supposed  to  report  on  many  of  those  under 
section  26. 

Mr.  ISIoNDELL.  But  you  do  not  go  into  them  with  a  view  to  pre- 
paring them  for  diplomatic  representation ;  that  is  a  function  of  the 
State  Department. 

Mr.  Denman.  Yes.  But  our  investigations  will  assist,  and  I  may 
say  our  proffered  assistance  has  not  been  without  welcome. 

Mr.  MoxDELL.  And  so  far  as  those  cases  are  concerned  the  only 
way  in  which  you  investigate  them  is  for  the  purpose  of  making 
reports. 

Mr.  Denmax.  But  suppose  we  ha\e  an  aggravated  case  in  Hong- 
kong which  really  represents  a  principle.  We  may  have  to  send  out 
there  and  take  testimony  in  Hongkong  in  order  to  report  on  that 
case.  Although  it  is  not  the  basis  of  a  claim,  it  is  the  basis  of  a  dis- 
covery of  a  method  of  discrimination.  At  the  same  time  and  out 
of  the  same  kinds  of  action  may  come  a  direct  complaint  to  us 
against  a  British  common  carrier  who  is  declining  to  accept  the 
goods  destined  to  Hongkong  for  a  blacklisted  American  firm,  a  San 
Francisco  merchant. 

Mr.  Brext.  Under  another  provision  of  the  laAv  which  requires 
an  investigation  for  the  purpose  of  correcting  such  a  condition  and 
awarding  damages. 

Mr.  MoxDELL.  So,  as  a  mattei-  of  fact,  you  feel  it  is  incumbent 
upon  you  to  investigate  all  those  cases  that  are  filed  in  the  State 
Department? 

Mr.  Denman.  Of  course,  we  may  find  that  there  is  a  group  of 
cases  all  alike.  We  will  say  "  We  have  investigated  carefully  this 
case  and  the  facts  are  so  and  so.  The  claim  filed  by  this  other  gen- 
tleman is  identical  in  its  facts.  Now,  this  line  of  discrimination  pre- 
sents this  evil." 

The  Chairman.  Arising  from  the  detention  of  one  ship  there  may 
be  a  great  many  claims  ? 

Mr.  Den  MAN.  Yes. 

Mr.  MoNDELL.  In  connection  with  one  of  those  cases  that  was  not 
called  to  your  attention  directly,  but  which  came  to  your  attention 
through  filing  a  claim  or  a  complaint  in  the  State  Department,  you 
might  find  it  necessary  to  interrogate  the  parties  in  interest  (ir  the 
parties  who  filed  the  claim  or  made  the  complaint  for  the  purposes 
of  your  investigation  and  information  with  reganl  to  that  particular 
kind  of  discrimination  ? 

Mr.  Denman.  Yes. 

Mr.  P>ri:nt.  It  luiglit  arise  in  this  way.  Mr.  Mondell:  The  man 
might  li\('  across  the  water,  and  lie  would   not  dai-e  to  put  certain 


TENTATIVE  OUTLINE  OF  ORGANIZATION  AND  ESTIMATES   OF   COST  OF  ADMINISTRATION  OF  THE  UNITED   STATES  SHIPPING  BOARD    FOR  THE  FISCAL  YEAR  1918. 


UNITED  STATES  SHIPPING  BOARD, 

FIVE  COMMISSIONERS, 

$37,500. 


EXECUTIVE  OFFICEH. 
SECRETARY  OF  BOARD, 


LAY 

,  DIVISION. 

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r,f« 

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der'jlirisilfctlou  otljoatd 

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"""". 

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bjomre 

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ntotoaippIM 

EXPLANATORY  NOTES, 

■  Will  bo  appointed  by  the  SMpptaE  Board.    All  olher  posillons,  in 
acoordBncB  mui  ihe  provisions  of  tbe  Shipping  Act,  must  be  filial 

..  Tiir  ■ifir"-"""'"'""''  r-ii..l|iions and  uncerlalntles  pertaining  losliiji- 


© 


REQULATION 


Vi  DShington  to  be  supplied 


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aS)  °iSmS?STGSsT°SScArsmp: 

w^^  *^ 

noport 

^S* 

ol  oblaining  roQcl  by  diplomatic  means  or  by  special  nets  ol 

rSi' 

oSocretarj  of  Treasury  results  orioiasLigatlons  ol  diserlmiua- 
Ign \osso[3in  American porlsflBamstAraorieansluppors  lUb 

ping  V 

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commBrcla 

practice  at  time  and  riacB  allest  maUd  al9l    OOU  to  (20  000 

oKiC^ 

„»l„an,c«.g„„r>oc..«B,b.g.....b.™rnl..a<.r 

Appolntm 
30  Clerks  10 

IOC  erks!! 

^"ml 

erical  oslablishmenl,  appointments  under 
olsupplies,  custody  of  omccs.  mails,  flies, 

rte  of  UailVandEilMV-V- ."-."!"-"     2,400 

„.^.d,.fODl„.io„ofb.J..,d,., 

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3,  telephone  operators,  messongerB ,  1  aliorcrs. 

DIVISION  OP  VESSELS  A 

ND   TERMINALS. 

Standardization  of  plans  and  speoiGcs 

chnat  Marine. 
Construction,  repair,  inspection  and  n 

cvolopmont  of  Amoilcan  Mer- 

Estlmilod 

(Design  and  eorstructlon  ol  vcssols). 

monfb. 

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Stoi^ecloK^tJIachinen' - 

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mereial  practice  at  time  and  place. 

^  NoTE.-Cleriealandmessenserswvlce 

by  onioootChier  Clerk. 

5™'  m«S".t'\v3lS"n' 
,p.nj.lion  ptovallibB  in  com- 

at  Wosbinglon  to  be  supplie,! 

the  Shipping  Board. 
Aonlysis  ol  cut  ol  tho  various  oporatio 

and  dlsbur»inient3  arisine  imder  appro 
building  ol  American  Merchant  Marine. 

untlne  conneolo"d  wi 
prialfoii  Of  530,000,0 

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■erve  ttaining  to  be  employed  by  the  day  or 
n  the  field  as  needed  at  rales  o(  CDm|ieiiSitioQ 

!fc,Sf,: 

Apr.,  May, 

H? 

Commlssfonersand  Secretary '        (g,B75 

io;ooo 

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95S,12S 

' 

' 

UNITED   STATES   SHIPPING   BOARD.  23 

facts  relating  to  tlie  matter  in  writing.-  In  order  to  got  at  the  true 
facts  Ave  would  have  to  go  and  sit  down  with  him  or  send  somebody 
to  sit  down  with  him  who  could  get  us  the  facts,  not  for  publication 
but  for  the  benelit  of  the  United  States  (Jovernnient.  Those  things 
are  occurring  in  our  own  country  to-day.  We  know  there  are  things 
they  want  to  tell  us,  but  they  do  not  dare  to  i)ut  it  in  writing  for 
fear  they  will  be  innnediately  cut  off, 

Mr.  Denman.  It  is  not  pleasant  to  see  ^Vnierican  merchants  cringe 
to  any  power.  They  had  to  submit  to  Gernuin  and  other  discrimina- 
tion before  the  war  and  will  have  to  meet  it  again  after.  Now,  it 
happens  to  be  mostly  British.  These  nations  are  all  alike  and  will 
continue  to  be  so  so  long  as  competition  reigns  on  the  sea.  Every  true 
American  rejoices  that  Congress  is  keenly  awake  to  this  need  for  pro- 
tection, 

o 


$19,000 
•1,500 
8. 200 
12,000 
6,000 
6,000 
C.OOO 
700 
22,000 
20,tXX) 

(100,000 


ble  this 


UNITED   STATES   SHIPPING   BOARD.  23 

facts  relating  to  the  matter  in  writing.-  In  order  to  get  at  the  true 
facts  we  would  have  to  go  and  sit  down  with  him  or  send  somebody 
to  sit  down  with  him  wlio  could  get  us  the  facts,  not  for  publicaticHi 
but  for  the  benelit  of  tlie  United  States  (iovernment.  Those  tilings 
are  occurring  in  our  own  country  to-day.  We  know  there  are  things 
they  want  to  tell  us,  but  they  do  not  dare  to  put  it  in  writing  for 
fear  they  will  be  immediately  cut  olf. 

Mr.  Den  MAN.  It  is  not  pleasant  to  see  ^Vmerican  merchants  cringe 
lo  an\-  power.  They  had  to  submit  to  German  and  other  discrimina- 
tion before  the  war  and  will  have  to  meet  it  again  after.  Now,  it 
liappens  to  be  mostly  British.  These  nations  are  all  alike  and  will 
continue  to  be  so  so  Icmg  as  competition  reigns  on  the  sea.  Every  true 
American  rejoices  that  Congress  is  keenly  awake  to  this  need  for  pro- 
tection. 


/'  ^y 


!-'■€?' 


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